"Live Like a Resident"

[hebel]

I'm a new attending and wanted clarification on what this meant exactly. When people say this, are they excluding student loan payments and retirement/savings?

Basically, does "live like a resident" mean your monthly expenses (rent, insurances, groceries, etc) should be like they were in residency, and the rest of it goes to loans and savings/retirement? Or do people include loan payments into your living expenses?

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[LookForZebras]

This phrase doesn't typically refer to loans. It's more about spending that you have control over. For example, buy a modest home instead of the million-dollar home (unless you're in a place like San Fran, in which the million-dollar home is modest at best). Save the 4-star restaurants for special occasions. Rent a boat for a day when you're on vacation instead of buying a boat. Buy a lightly used car instead of a brand new one. ...things like that.

You should go ahead and make whatever loan payments you need to make, and whether you personally consider them to be part of your living expenses or separate from them is really up to you.

 

[hebel]

This phrase doesn't typically refer to loans. It's more about spending that you have control over. For example, buy a modest home instead of the million-dollar home (unless you're in a place like San Fran, in which the million-dollar home is modest at best). Save the 4-star restaurants for special occasions. Rent a boat for a day when you're on vacation instead of buying a boat. Buy a lightly used car instead of a brand new one. ...things like that.

You should go ahead and make whatever loan payments you need to make, and whether you personally consider them to be part of your living expenses or separate from them is really up to you.

Thanks for the reply. Yeah, to me including loan payments into living expenses seemed unreasonable. As an attending the payment amounts have gone up, and are actually about as much as one of my bi-weekly resident paychecks. So including them into current living expenses felt like basically advising you live on half your residency salary.

 

[thumbz]

The whole idea of living like a resident is so you can kill those pesky student loans. You have two paths ahead of you.

Path 1 - Live like a resident. Make $250k/yr, take home $175k, spend $40k on living like a resident and throw $135k at the loans and be debt free in 3 years.

Path 2 - Live like an attending. Make $250k/yr, take home $175k, spend 60k on housing, 40k on going out, 25k on car payments, 20k on misc crap you dont need and have $30k a year to throw at your loans and be debt free in 30 years.

 

[NITRAS]

Thanks for the reply. Yeah, to me including loan payments into living expenses seemed unreasonable. As an attending the payment amounts have gone up, and are actually about as much as one of my bi-weekly resident paychecks. So including them into current living expenses felt like basically advising you live on half your residency salary.

We've all known people that graduate, get a job making $250-$300k, buy/lease one (or two) $70k cars, buy a $700k house and don't stick to a budget and wonder why they haven't paid down their loans any. Shoot, you can eat out for another couple thousand a month if you aren't too careful.

I'd strongly recommend setting your life up with lots of margin. Really consider renting the first year or two of being an attending. Many people will move, and renting is ultimately cheaper on the short term.

 

[shiftingmirage]

Generally when someone becomes an attending, they are entering the work force 8-10 years after their non-doctor friends and have generally saved very little and have lots of debt, predominately in the form of student loans.

The goal of living like a resident is to use your new attending wealth to pay off your debt and build a nest egg, prior to buying (insert expensive thing you want here).

It is much easier to go from spending less to spending more, than from spending more, to spending less.

 

[FutureInternist]

The whole idea of living like a resident is so you can kill those pesky student loans. You have two paths ahead of you.

Path 1 - Live like a resident. Make $250k/yr, take home $175k, spend $40k on living like a resident and throw $135k at the loans and be debt free in 3 years.

Path 2 - Live like an attending. Make $250k/yr, take home $175k, spend 60k on housing, 40k on going out, 25k on car payments, 20k on misc crap you dont need and have $30k a year to throw at your loans and be debt free in 30 years.

I read this in Morpheus’s voice..

There are different ways to do this but my way is/was...

Minimum loan repayments until 3-6 months expenses saved.
Short term and long term disability.
Life insurance on you and spouse.
Rent/buy is family specific... do you see yourself there in 5-10 years.
Monthly expenses.. rent, food, cars etc.
Then whatever is left over goes to loans.

 

[The White Coat Investor]

I'm a new attending and wanted clarification on what this meant exactly. When people say this, are they excluding student loan payments and retirement/savings?

Basically, does "live like a resident" mean your monthly expenses (rent, insurances, groceries, etc) should be like they were in residency, and the rest of it goes to loans and savings/retirement? Or do people include loan payments into your living expenses?

When I say it, I'm referring to your lifestyle spending. A resident makes $50-60K. If you can make $200-400K and spend $50K, that leaves a lot of money to pay off student loans, save up a downpayment on a dream home, and max out your retirement accounts catching up to your college roommates. I recommend docs do this for 2-5 years. An orthopedist who graduated with $50K in loans can do it for two. A family doc who graduated with $400K better do it for 5.

 

[hebel]

When I say it, I'm referring to your lifestyle spending. A resident makes $50-60K. If you can make $200-400K and spend $50K, that leaves a lot of money to pay off student loans, save up a downpayment on a dream home, and max out your retirement accounts catching up to your college roommates. I recommend docs do this for 2-5 years. An orthopedist who graduated with $50K in loans can do it for two. A family doc who graduated with $400K better do it for 5.

Thanks for the reply. I actually wrote this question as I was finalizing the budget portion of my written financial plan from your "Fire Your Financial Advisor" course I purchased. Thank you for creating it (and for the blog/podcast in general). Creating the plan has been such a useful and positive process.

 

[finalpsychyear]

When I say it, I'm referring to your lifestyle spending. A resident makes $50-60K. If you can make $200-400K and spend $50K, that leaves a lot of money to pay off student loans, save up a downpayment on a dream home, and max out your retirement accounts catching up to your college roommates. I recommend docs do this for 2-5 years. An orthopedist who graduated with $50K in loans can do it for two. A family doc who graduated with $400K better do it for 5.

I will add that if this same orthopedist with 50k loans does "live like a resident" for closer to 5 years he will reach the ability to Fat FIRE very soon after even if he starts spending quite a bit but continues to max out all retirement accounts. I will note their salary is 500k per medscape 2020 data which is likely on the low end but even having that salary for 5 years gets you near 2m if you only spend 50k per year which is very unlikely but it shows how quickly you can accumulate if one was so inclined.

Someone in the 35-37 age sitting on 2m invested assets earned from medicine is maybe unicorn thinking although possible for any specialty with a 500k range.